FE410038RO

                                STATE OF NEW YORK
                    DIVISION OF HOUSING AND COMMUNITY RENEWAL
                          OFFICE OF RENT ADMINISTRATION
                                   GERTZ PLAZA
                             92-31 UNION HALL STREET
                             JAMAICA, NEW YORK 11433

      ------------------------------------X 
      IN THE MATTER OF THE ADMINISTRATIVE :  ADMINISTRATIVE REVIEW
      APPEALS OF                             DOCKET NO. FE410038RO
                                                         

           Kay Hakim W. 71st Street       :  DISTRICT RENT OFFICE
                                             DOCKET NO. L- 3112491 R/T        
                                                                              
                                             TENANT: Elinore Chechak         
                            PETITIONER    : 
      ------------------------------------X                             

           ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW

      On May 7, 1991, the above-named owner filed a Petition for 
      Administrative Review against an order issued on April 2, 1991, by a 
      Rent Administrator, in which said Administrator had determined the fair 
      market rent of the housing accommodations known as apartment 22 at 235 
      West 71st Street, New York City.  The fair market rent was determined 
      pursuant to the special fair market rent guideline promulgated by the 
      New York City Rent Guidelines Board for use in calculating fair market 
      rent appeals.

      The origin of this proceeding was in the tenant's simultaneous filing 
      (on March 31, 1984) of a complaint of rent overcharge and a Fair Market 
      Rent Adjustment Application.  The complaint alleged inter alia that 
      although the apartment had been "remodeled with new bathrooms and 
      kitchen cabinets and appliances," the "wiring, plumbing, windows, etc." 
      were old.  The Application stated that the tenant had not received an 
      "Initial Legal Regulated Rent Notice Form (DC-1, DC-2, DS-1)" from the 
      owner.

      In answer to the complaint and to the Administrator's inquiries, the 
      owner: submitted documentation indicating extensive renovation of the 
      apartment just prior to the complainant's occupancy; stated that it had 
      mailed a copy of the "DC-2" form by certified mail and by certified 
      mail, return receipt requested, on September 9, 1982, so that the 
      aforementioned fair-market rent adjustment application was untimely; and 
      submitted photocopies of receipts for the mailing of certified mail, 
      each stamped September 9, 1982 and each imprinted "PS Form 3800, Feb. 
      1982" and "U.S.G.P.O. 1983-403-517"; one bore the number P 639 805 651, 
      and the other, P 639 805 652.

      The tenant replied that she had received her lease by certified mail on 
      September 13, 1982, with no DC-2 form enclosed, and provided her own 
      list of the vacancy improvements that had been made.

      The Administrator then referred the matter for a hearing to an 
      Administrative Law Judge, and a notice of same was sent to the parties, 
      stating that the purpose thereof was to "determine if the tenant ever 
      received a proper DC-2 notice and if the tenant may file a fair market 
      rent appeal."  Copies of the referral order were sent to the parties.







      FE410038RO



      When the hearing convened on June 29, 1987, the owner being present with 
      counsel, the Administrative Law Judge stated before testimony began: 
      "[T]he purpose of today's hearing is to determine if the tenant . . . 
      ever received a proper DC-2 notice and if the tenant may file a fair 
      market rent appeal."

      The Administrative Law Judge's subsequent report summarized the 
      pertinent testimony as follows.  The tenant testified: that before 
      assuming occupancy, she had inquired about the previous tenant's rent 
      but had been told that because the apartment was being renovated, there 
      was "no need to fill out the prior tenant's rental history rider"; that 
      "a copy of her lease was mailed . . . without a DC-2 notice"; that 
      because she had been trying to find out what the prior tenant had paid, 
      she would have remembered receiving a DC-2 notice, since the one put in 
      evidence at the hearing indicated a prior rent of only $265; that she 
      had received a mailbox key on August 9, 1982, but had not moved into the 
      apartment until October 15; and that she had picked up her lease (sent 
      by certified mail) at the post office because she had found a paper in 
      her mailbox "indicating a letter was sent."  Kambiz Hakim (one of the 
      principals of the owner) testified that in September of 1992 he had gone 
      to the office of his lawyer Mr. Olshever, where the latter had prepared 
      the DC-2 notice, that that notice had been signed on September 9, that 
      he, Mr. Hakim, had taken three envelopes each containing a DC-2 notice, 
      from Olshever and mailed them, and that Olshever never received a "green 
      card" from the post office.  Mr. Olshever testified that he had told 
      Hakim to mail one notice by regular mail, one by certified mail and one 
      by certified mail, return receipt requested.

      The Administrative Law Judge found the tenant's testimony "credibl[e]" 
      as to non-receipt of the notice and found, "based upon the entire 
      record," that she had "never received the DC-2 notice allegedly mailed 
      by the owner," concluding that the tenant was therefore entitled to a 
      determination of the "fair market rent" of the subject apartment and 
      recommending that the Administrator continue to process the case for 
      that purpose.

      In the course of that processing, the Administrator received a copy of 
      a "Contract for Labor" under the letterhead of " Moliday Construction 
      Corporation" and bearing the name of the owner's principal and the 
      address of the subject accommodations over the following "Job Proposal" 
      and two illegible signatures.

           Provide labor for demolition, renovation and reconstruction of 
           above apartment per diagrams; construct two new bathrooms; 
           convert former dining room into master bedroom; create and 
           install air-conditioning opening through-wall; relocate doors 
           to rooms as indicated; create refrigerator alcove; rebuild 
           kitchen and install new fixtures and cabinets to be provided 
           by owner; reconstruct maid's room to integrate with bath as 
           shown; do other work as indicated on diagram.  Contractor 
           shall have the right to order materials up to $4,000.00 and 
           charge same to owner, or be promptly paid for by owner if paid 
           for by contractor.

           Estimated price (without changes or additions):  $15,000.00.



      FE410038RO


      Also submitted were copies of 19 checks drawn by the owner to the order 
      of Moliday Construction Corporation, from July through October of 1982, 
      which totalled over $16,000.

      In numerous submissions throughout the pendency of this proceeding 
      before the Administrator, the tenant vigorously contested, in detail, 
      the owner's representations as to what it had spent for vacancy 
      improvements.  In the middle of one rather extensive submission, the 
      tenant stated simply, without accompanying detail or argument, that 
      Moliday Construction was owned by the family of the owner's principal.  
      The owner did not respond to that statement before the Administrator.

      The ensuing order, here appealed, states as follows.  (1) At the 
      hearing, "the owner was unable to establish that the DC-2 notice was 
      served upon the tenant.  Therefore, the tenant is entitled to challenge 
      the Initial Legal Regulated Rent."
                                      * * *
      (2) "[T]he owner's allegation that the subject apartment is unique is   
      . . . without merit.

      (3) "The Emergency Tenant Protection Act . . . directs that the Fair    
      Market Rent be determined on the basis of two criteria: (1) a           
      special guidelines order promulgated by the New York City Rent          
      Guidelines Board . . . and (2) by `rents generally prevailing in the    
      same area for substantially similar housing accommodations,' language 
      referred to as `comparability.'
                                      * * *
      "With respect to the second statutory criterion . . . , since the owner 
      has furnished neither usable June 30, 1974 rent data nor the rental 
      history data required for consideration of updated comparables, the Fair 
      Market Rent will be determined solely on the basis of the Special Fair 
      Market Rent Guidelines."

      (4) As to the owner's assertion of its right to a rental increase for 
      renovations done during the vacancy preceding the tenant's occupancy, 
      that increase is limited to 1/40 (by law) of $9,266.17 recognized as 
      spent for same; included in that total are payments for (inter alia): 
      electrical labor; installation of lighting fixtures, ceiling fans, 
      heater and outlets; plaster labor; plumbing labor; demolition and 
      preparation labor; and "construction labor."  As to Moliday 
      Construction, because the owner "failed to refute" the tenant's 
      assertion that that business belonged to the owner's family, asserted 
      payments to that concern must be "scrutinize[d] . . .  more carefully 
      than when there is no potential for inflated costs," and under that 
      standard they will be disallowed because (a) the job proposal contained 
      no breakdown of costs of its constituent items, (b) "increases [are here 
      being] granted for cancelled checks payable to individual laborers for 
      plumbing, plaster, demolition[,] construction and electrical labor . . 
      . " and (c) "there is no proof of what the fee paid for and whether it 
      was necessary.'

      Further the Rent Administrator in his order adjusted the initial legal 
      regulated rent by establishing a fair market rent of $697.79 effective 
      September 15, 1982 and directed the owner to refund $147,984.47 to the 
      tenant.

      The Administrator's order was followed by the instant petition, which 







      FE410038RO


      states in substance (a) that the Administrative Law Judge injected error 
      into the proceeding by making a finding as to whether the tenant had 
      received the DC-2 notice, rather than as to whether the owner had sent 
      it to her by certified mail (and that the record, viewed correctly, 
      shows that the tenant--duly served with that notice--had no right to a 
      fair market rent appeal); (b) that at the least the order should be 
      revoked because "the Administrator's belated notification to petitioner 
      of the complaint precluded the submission of comparability data needed 
      to justify the rent"; (c) that at the least the matter should be 
      "reopened for the purpose of [affording] the petitioner an opportunity 
      to submit `weighted' comparability data to reflect the unique nature of 
      the apartment"; and (d) that the Administrator erred in disallowing as 
      vacancy-improvement costs, the aforementioned payments to Moliday 
      Construction Corporation (having erred initially in applying extra 
      scrutiny to those payments based on the unwarranted--and inaccurate-- 
      assumption of overlapping ownership between owner and contractor).

      The tenant's answer to the petition argues in pertinent part as follows.  
      (1) The Administrative Law Judge, whose decision as to credibility 
      should be given great deference, clearly disbelieved the owner's 
      evidence as to service of the DC-2.  (2) In fact, that evidence was (for 
      various reasons given) contradictory or otherwise incredible.  (3) The 
      owner is unworthy of belief because it has submitted fabricated 
      evidence, to wit: (a) a purported copy of a note signed by the tenant 
      acknowledging repairs to the apartment, an original of which has never 
      been submitted despite the fact that the tenant informed the 
      Administrator that she had not written or signed that note; and (b) the 
      aforementioned two post-office receipts, submitted to corroborate the 
      sending of the DC-2 by certified mail in 1982, which (as the Postal 
      Service has informed the tenant in a letter appended to her answer) were 
      not printed until 1983.  (4) Moreover the law provides that the 90-day 
      period for filing a Fair Market Rent Application does not begin to run 
      until the tenant has received the DC-2 notice.  (5) Regarding the 
      uniqueness of the subject accommodations, "[i]n the subject building 
      alone, there are at least seven other apartments [, numbers 32, 42, 52, 
      62, 72, 82 and 92,] that contain the same footage as m[ine and] 
      basically the same configurations."  (6) The owner was aware that its 
      financial interest in Moliday Construction was at issue herein, and has 
      "never offered satisfactory proof disputing" the allegation that such 
      interest existed.  Moreover the mere signing of a job proposal cannot 
      convert it into an "executed contract," and the one in question "is 
      undated, does not contain any printed letterhead, and nowhere contains 
      the name of Moliday Construction Corporation." *
                                                                              
      * The Commissioner would point out that the imprinted company name is so 
      high on the page, that a person perusing a copy of the Moliday contract 
      stapled beneath other pages, will tend not to see the Moliday 
      letterhead.

      The owner's response to the tenant's answer states in substance that the 
      aforementioned Postal Service letter has been submitted much too late 
      for this Division to consider it, and that at any rate it does not 
      establish that the slips in question were printed in 1983.

      The tenant replies inter alia, that the question of fraud may be raised 
      at any time, and that the author of the Postal Service letter is willing 
      to testify if necessary.


      FE410038RO



      The Commissioner has since received a letter directly from Karen 
      Roberson, the Postal Service employee who signed the aforementioned 
      letter submitted by the tenant, stating in pertinent part: that the 
      information in question "was obtained from historical data files 
      maintained at Postal Service Headquarters, Business Mail Acceptance, 
      Washington, DC"; that "[a]t the time of [the tenant's] inquiry, [Ms. 
      Roberson] was responsible for the revisions, modifications, and re- 
      ordering of all postal forms (including the certified label) originating 
      from the Business Mail Acceptance Office"; that Ms. Roberson "would be 
      more than willing to testify to the information" that she had previously 
      provided; that that information "may also be available through the U.S. 
      Government Printing Office in Washington, D.C., providing they still 
      retain records from February 1983"; and that if the Commissioner should 
      need further assistance, he should "feel free to contact [Ms. Roberson] 
      at (312) 765-5495."  The Commissioner has sent the owner a copy of this 
      letter, with an invitation to comment thereon and on the merits of Ms. 
      Roberson's entire submission, but has received no response from the 
      owner.

      The Commissioner is of the opinion that this petition should be denied.

                                        I.

      The Administrator correctly followed the determination of the 
      Administrative Law Judge based upon the credibility of the parties who 
      testified at the hearing.  The Administrative Law Judge found the 
      tenant's testimony that she had not received the DC-2 notice and that 
      only a copy of the lease was sent by certified mail to be credible.

      Further in answering the instant petition, the tenant presents evidence 
      that the Postal Service documents presented by the owner to prove the 
      1982 mailing, were not printed until the following year.  By thus 
      raising the issue of possible fraud, the tenant invokes an exception to 
      the rule, cited by petitioner, that matters not brought up before the 
      Administrator may not be raised on appeal.  

      The remainder of the owner's response to Ms. Roberson's letters consists 
      of attacks on the contents thereof, based on internal inconsistencies 
      and on inadequacies in demonstrating the basis of her knowledge.  
      Despite the importance of the tenant's accusation, petitioner presents 
      no substantive contradiction as to the printing date in question, nor 
      even a request for time to investigate; and while complaining that 
      acceptance of this post-hearing evidence would deprive the owner of the 
      chance to cross-examine its source, petitioner has not requested a 
      hearing at which it might do so.  We are left with a heavy preponderance 
      of the evidence indicating that the documents proffered and reproffered 
      by the owner, to prove a 1982 mailing, did not exist during that year.  
      Thus Ms. Roberson's submissions will be entertained and the Commissioner 
      will find that because the tenant was never served with the DC-2 notice, 
      the Administrator was correct in processing her Fair Market Rent 
      Application.
                                       II.

      The next citation of error is predicated on a delay of "many months" 
      between the tenant's application of March 31, 1984, and the agency's 
      notice to the owner that it had been filed.  The petition asserts that 







      FE410038RO


      "the DHCR had the . . . duty to notify any owner who would be adversely 
      affected by the filing of such a complaint within one (1) month of its 
      filing. * * *  Thus, an owner should have received notification of a 
      March, 1984 complaint in April, 1984."

      The record contains a copy of a form letter from this Division-- 
      addressed to one of the owner's principals at 205 East 85th Street in 
      New York City, dated April 4, 1984, and headed with the tenant's married 
      surname and the address of the subject apartment--informing the owner 
      that the tenant had filed a complaint before April 1, 1984, and that 
      rental records dating as far back as 1968 might be required.  Attached 
      to that copy is a signed note headed with the docket number of the 
      complaint herein and the date "April 4, 1984," which states: "On the 
      above noted date I mailed a notice to the owner(s) at the address 
      indicated thereon."  Because that address is the one the owner provided 
      as its managing agent's in its 1984 registration, and because inspection 
      of the voluminous Administrator's file reveals no returned envelope 
      containing the subject form letter, the Commissioner will find that the 
      owner was indeed notified of the complaint within a month of its filing, 
      and will therefore determine that even under petitioner's criteria 
      (which are not hereby adopted), the owner's ability to submit 
      "comparables" was not fatally compromised by agency delay.

                                       III.

      Apparently arguing in the alternative to the ground just discussed, 
      petitioner now asserts that it could indeed offer comparables, if only 
      the subject apartment were not different from every other apartment in 
      the building.  "The subject apartment," the owner states, "contains more 
      rooms than any other apartment."  The ground given for that assertion 
      is: "Upon information and belief, the DHCR computer registration records 
      confirm this fact."  What those records confirm, however, is that 
      apartments 32, 42, 52, 62, 72, 82 and 92 have the same number of rooms-- 
      6--as the subject accommodations.  Since petitioner points to nothing 
      else in the record to support its claim of uniqueness, the 
      Administrator's determination that that claim is meritless cannot be 
      disturbed (and the Commissioner need not entertain petitioner's theory 
      regarding the proper treatment of unique apartments in the context of 
      comparability).
                                       IV.

      Petitioner is correct that the signed "job estimate" from Moliday 
      Construction company qualifies as a contract, and also correct that the 
      Administrator erred in stating that he was using extra scrutiny 
      regarding it based on common ownership between owner and contractor (the 
      owner's failure to address the tenant's "buried" allegation of same 
      being clearly insufficient to justify that finding).  Nevertheless the 
      Commissioner will not disturb the Administrator's refusal to base any 
      rental increase on the Moliday Construction documentation. 

      Examining the Moliday documents with the reasonable scrutiny used in all 
      proceedings and especially in view of the tenant's dispute herein that 
      all claimed improvements were made, the Commissioner has little 
      difficulty in determining that because no values are set forth therein 
      for the various components of the job (especially in view of some 
      apparent duplication of jobs done by--and payments credited by the 
      Administrator to--other contractors herein), the Administrator was not 


      FE410038RO


      required to attempt separation of the wheat from the chaff, but could 
      rather deny credit for the entire undifferentiated bill.

      The owner having shown, in sum, no reason to change any of the 
      Administrator's determinations, the order appealed from will be 
      affirmed.

      THEREFORE, in accordance with the provisions of the Rent Stabilization 
      Law and Code, it is

      ORDERED, that this petition be, and the same hereby is, denied, and that 
      the order of the Rent Administrator be, and the same hereby is, 
      affirmed.



      ISSUED:



                                                                    
                                      JOSEPH A. D'AGOSTA
                                      Deputy Commissioner







    

TenantNet Home | TenantNet Forum | New York Tenant Information
DHCR Information | DHCR Decisions | Housing Court Decisions | New York Rent Laws
Disclaimer | Privacy Policy | Contact Us

Subscribe to our Mailing List!
Your Email      Full Name